Associated Brewers Distributing Co. v. Riley

KNIGHT, J. Plaintiff brought this action against the State of California, its controller and its treasurer, to recover excise beverage taxes amounting to $1,085.50, levied by the state board of equalization on an importation of alcoholic liquors pursuant to the provisions of the state Beverage Tax Act of 1933 (Stats. 1933, p. 625), and paid by plaintiff under protest. Defendants demurred to the complaint upon the ground that it failed to state facts sufficient to constitute a cause of action or to entitle plaintiff to the relief sought, and the demurrer was overruled. Thereupon defendants filed an answer, and on plaintiff’s motion judgment on the pleadings was entered in plaintiff’s favor. From said judgment defendants prosecute this appeal.

The beverage upon which the tax was imposed consisted of 49,341 gallons of beer and ale. It was manufactured in a foreign country, and imported into the United States and into the State of California during the four months immediately preceding February, 1934, by parties unknown to respondent. Thereupon it was abandoned to and seized by the United States government for failure to pay the customs duties thereon, following which the government sold the liquor at public auction, in Los Angeles, in conformity with the requirements of federal statutes. Respondent was the purchaser at the sale, but did not report the purchase to the state board of equalization as required by the provisions of the Beverage Tax Act; and two years or more later said board assessed the excise tax on said liquor, which respondent paid under protest.

The pertinent provisions of the act of 1933 are the following: (Sec. 5) “An excise tax is hereby imposed on all beverages [specified in the act, including beer and ale] sold by a manufacturer at the rate of sixty-two cents for every barrel containing not more than thirty-one gallons ...” (See. 1) “(c) ‘Manufacturer’ means every person who, within the State of California, produces, brews, ferments or manu[237]factures a beverage as herein defined, or who, in the case of a beverage produced, brewed, fermented or manufactured outside of the State of California, is the first in possession thereof within the State after completion of the act of importation. (d) ‘Sale’means and includes any sale, exchange, barter or other act whereby the title to a beverage is transferred for a consideration, from a manufacturer, ‘on sale’ licensee or ‘off sale’ licensee as herein defined, to any other person and the words ‘sell’ or ‘sold’ mean and include the act of making any such ‘sale’.” (Sec. 5) “ ... It shall be presumed, for the purposes of this act, that all beverage produced, brewed, fermented or manufactured outside of this State and imported into this State by any manufacturer or delivered to such manufacturer here, has been sold by such manufacturer unless he shall establish to the satisfaction of the board that such beverage is still in the ownership and possession of such manufacturer, or, prior to the termination of such ownership or possession, has been lost through evaporation, leakage, spillage or destruction by the elements. ...”